Question: Build the spreadsheet pictured in Exhibit 3.
Build the spreadsheet pictured in Exhibit 3.3. Be sure to use formulas that will automatically calculate profitability if fixed cost, variable cost, or sales volume is changed. Data from Exhibit 3-3: Table Summary: Summary Spreadsheet Report to Facilitate “What-If†Analysis 
The range of scenarios illustrated in the spreadsheet represents only a few of the many alternatives management can analyze with a few quick keystrokes. The spreadsheet program recalculates profitability figures instantly when one of the variables changes. If the president asks what would happen if Bright Day sold 10,000 units, the accountant merely substitutes the new number for one of the existing sales volume figures, and revised profitability numbers are instantly available. By changing the variables, management can get a real feel for the sensitivity of profits to changes in cost and volume. Investigating a multitude of what-if possibilities involving simultaneous changes in fixed cost, variable cost, and volume is called sensitivity analysis. After reviewing the spreadsheet analysis, Bright Day’s management team is convinced it should undertake radio advertising for Delatine. Only under the direst circumstances (if actual sales are significantly below expectations while costs are well above expectations) will the company incur a loss.
> Malone Company produces a product that has a variable cost of $54 per unit and a sales price of $79 per unit. The company’s annual fixed costs total $750,000. It had net income of $250,000 in the previous year. In an effort to increase the company’s mark
> Cobb Company currently produces and sells 9,000 units annually of a product that has a variable cost of $20 per unit and annual fixed costs of $195,000. The company currently earns a $228,000 annual profit. Assume that Cobb has the opportunity to invest
> Use Exhibit 3.3 in this chapter to answer the following questions. Required 1. Determine the sales volume, fixed cost, and variable cost per unit at the break-even point. 2. Determine the expected profit if Bright Day projects the following data for Dela
> Owen Company makes a product that sells for $61 per unit. The company pays $37 per unit for the variable costs of the product and incurs annual fixed costs of $360,000. Owen expects to sell 20,000 units of product. Required Determine Owen’s margin of saf
> Match the numbers shown in the graph with the following items: 1. Fixed cost line 2. Total cost line 3. Break-even point 4. Area of profit 5. Revenue line 6. Area of loss
> Bullions Enterprises Inc. (BEI) makes gold, silver, and bronze medals used to recognize outstanding athletic performance in regional and national sporting events. The per-unit direct costs of producing the medals follow. During the year, BEI made 1,200 u
> Dannica Corporation produces products that it sells for $40 each. Variable costs per unit are $25, and annual fixed costs are $360,000. Dannica desires to earn a profit of $150,000. Required 1. Use the equation method to determine the break-even point in
> The following graph setups depict the dollar amount of fixed cost on the vertical axes and the level of activity on the horizontal axes. Required 1. Draw a line that depicts the relationship between total fixed cost and the level of activity. 2. Draw a l
> Bell Entertainment sells souvenir T-shirts at each rock concert that it sponsors. The shirts cost $7 each. Any excess shirts can be returned to the manufacturer for a full refund of the purchase price. The sales price is $16 per shirt. Required 1. What a
> Bell Entertainment sponsors rock concerts. The company is considering a contract to hire a band at a cost of $84,000 per concert. Required 1. What are the total band cost and the cost per person if concert attendance is 2,000, 2,500, 3,000, 3,500, or 4,0
> Leach Trophies makes and sells trophies it distributes to little league ballplayers. The company normally produces and sells between 6,000 and 12,000 trophies per year. The following cost data apply to various activity levels. Number of Trophies 6,000 8,
> Tanaka Company’s cost and production data for two recent months included the following. Required 1. Separately calculate the rental cost per unit and the utilities cost per unit for both March and April. 2. Identify which cost is variab
> The following variable production costs apply to goods made by O’Brien Manufacturing Corporation. Required Determine the total variable production cost, assuming that O’Brien makes 4,000, 8,000, or 12,000 units.
> Fanning Corporation incurs the following annual fixed costs. Required Determine the total fixed cost per unit of production, assuming that Fanning produces 4,000, 4,500, or 5,000 units.
> At the various activity levels shown, Harper Company incurred the following costs. Required Identify each of these costs as fixed, variable, or mixed.
> Sterling Boat Company makes inexpensive aluminum fishing boats. Production is seasonal, with considerable activity occurring in the spring and summer. Sales and production tend to decline in the fall and winter months. During Year 2, the high point in ac
> Use the 2019 Form 10-K (year ended on December 31, 2019) for Coca-Cola Bottling Co. Consolidated to complete the following requirements. Be aware that Coca-Cola Bottling Co. Consolidated (COKE) is a separate company from The Coca-Cola Company (KO), so do
> Mountain Camps, Inc., leases the land on which it builds camp sites. Mountain is considering opening a new site on land that requires $2,500 of rental payment per month. The variable cost of providing service is expected to be $6 per camper. The followin
> The following income statement applies to Kawai Company for the current year. Required 1. Use the contribution margin approach to calculate the magnitude of operating leverage. 2. Use the operating leverage measure computed in Requirement a to determine
> The following income statement was drawn from the records of Joel Company, a merchandising firm. JOEL COMPANY Income Statement For the Year Ended December 31, Year 1 Required 1. Reconstruct the income statement using the contribution margin format. 2. Ca
> The following income statements illustrate different cost structures for two competing ­companies. Required 1. Reconstruct Hill’s income statement, assuming that it serves 400 customers when it lures 200 customers away from C
> Solomon Corporation paid one of its sales representatives $4,000 during the month of March. The rep is paid a base salary plus $10 per unit of product sold. During March, the rep sold 300 units. Required Calculate the total monthly cost of the sales repr
> The following graph setups depict the dollar amount of variable cost on the vertical axes and the level of activity on the horizontal axes. Required 1. Draw a line that depicts the relationship between total variable cost and the level of activity. 2. Dr
> Rachael’s Restaurant, a fast-food restaurant company, operates a chain of restaurants across the nation. Each restaurant employs eight people; one is a manager paid a salary plus a bonus equal to 4 percent of sales. Other employees, two cooks, one dishwa
> Soundwave Company manufactures and sells high-quality audio speakers. The speakers are encased in solid walnut cabinets supplied by Walton Cabinet, Inc. Walton packages the speakers in durable moisture-proof boxes and ships them by truck to Soundwave’s m
> In February 2006, former senator Warren Rudman of New Hampshire completed a 17-month investigation of an $11 billion accounting scandal at Fannie Mae (a major enterprise involved in home mortgage financing). The Rudman investigation concluded that Fannie
> The CFO of the Jordan Microscope Corporation intentionally misclassified a downstream transportation expense in the amount of $575,000 as a product cost in an accounting period when the company made 5,000 microscopes and sold 4,000 microscopes. Jordan re
> Vulcan College School of Business is divided into three departments: accounting, marketing, and management. Relevant information for each of the departments follows. Vulcan is a private school that expects each department to generate a profit. It rewards
> Gwen Pet Supplies purchases its inventory from a variety of suppliers, some of which require a six-week lead time before delivering the goods. To ensure that she has a sufficient supply of goods on hand, Ms. Leblanc, the owner, must maintain a large supp
> Becky Shelton, a marketing coordinator for Douglass Enterprises, is in charge of ordering the T-shirts to be sold for the company’s annual fund-raising project. The T-shirts are printed with a special Douglass Enterprises logo. In some years, the supply
> After reviewing the financial statements of Perez Company, Lou Brewer concluded that the company was a service company. Mr. Brewer based his conclusion on the fact that Perez’s financial statements displayed no inventory accounts. Required Explain how Pe
> The following financial statements model shows the effects of recognizing depreciation in two different circumstances. One circumstance represents recognizing depreciation on equipment used in a factory. The other circumstance recognizes depreciation on
> Anne Wood was talking to another accounting student, Don Kirby. Upon discovering that the accounting department offered an upper-level course in cost measurement, Anne remarked to Don, “How difficult can it be? My parents own a toy store. All you have to
> During Year 1, Rooney Manufacturing Company incurred $8,000,000 of research and development (R&D) costs to create a long-life battery to use in computers. In accordance with FASB standards, the entire R&D cost was recognized as an expense in Year 1. Manu
> Identify each of the items shown in the left column of the following table as being an upstream, a midstream, or a downstream cost by placing an X in the one of the columns to the right of the items column. The first item is shown as an example. Item: Di
> Mustafa Manufacturing Company began operations on January 1. During the year, it started and completed 3,000 units of product. The financial statements are prepared in accordance with GAAP. The company incurred the following costs: 1. Raw materials purch
> Weib Manufacturing experienced the following events during its first accounting period: 1. Recognized revenue from cash sale of products. 2. Recognized cost of goods sold from sale referenced in Event 1. 3. Acquired cash by issuing common stock. 4. Paid
> A review of the accounting records of Baird Manufacturing indicated that the company incurred the following payroll costs during the month of March. Assume the company’s financial statements are prepared in accordance with GAAP. 1. Salary of the company
> Encompass Health Corporation (formerly HealthSouth Corporation) claims to be “a leading provider of integrated healthcare services, offering both facility-based and home-based patient care through our network of inpatient rehabilitation hospitals, home h
> Driscoll Industries recognized the annual cost of depreciation on its December 31, Year 2, financial statements. Using the following horizontal financial statements model, indicate how this event affected the company’s GAAP-based financ
> On January 1, Year 1, Bacco Company had a balance of $72,350 in its Delivery Equipment account. During Year 1, Bacco purchased delivery equipment that cost $22,100. The balance in the Delivery Equipment account on December 31, Year 1, was $69,400. The Ye
> On January 1, Year 1, Shelton Company had a balance of $325,000 in its Land account. During Year 1, Shelton sold land that had cost $106,500 for $132,000 cash. The balance in the Land account on December 31, Year 1, was $285,000. Required 1. Determine th
> The following accounts and corresponding balances were drawn from Jogger Company’s Year 2 and Year 1 year-end balance sheets. The Year 2 income statement is shown as follows. Required 1. Prepare the operating activities section of the s
> Expert Electronics Inc. (EEI) recognized $3,800 of sales revenue on account and collected $2,100 of cash from accounts receivable. Further, EEI recognized $900 of operating expenses on account and paid $700 cash as partial settlement of accounts payable.
> The following accounts and corresponding balances were drawn from Marinelli Company’s Year 2 and Year 1 year-end balance sheets. The Year 2 income statement is shown as follows. Required 1. Use the direct method to compute the amount of
> The following accounts and corresponding balances were drawn from Avia Company’s Year 2 and Year 1 year-end balance sheets. During the year, $46,000 of unearned revenue was recognized as having been earned. Rent expense for Year 2 was $
> Shim Company presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Shim’s Year 2 and Year 1 year-end balance sheets. The income statement reported a $1,500 gain
> Alfonza Incorporated presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from the company’s Year 2 and Year 1 year-end balance sheets. The Year 2 income statement
> The following accounts and corresponding balances were drawn from Dexter Company’s Year 2 and Year 1 year-end balance sheets. Other information drawn from the accounting records: 1. Dividends paid during the period amounted to $50,000.
> On January 1, Year 1, Hardy Company had a balance of $150,000 in its Common Stock account. During Year 1, Hardy paid $20,000 to purchase treasury stock. Treasury stock is accounted for using the cost method. The balance in the Common Stock account on Dec
> On January 1, Year 1, DIBA Company had a balance of $450,000 in its Bonds Payable account. During Year 1, DIBA issued bonds with a $200,000 face value. There was no premium or discount associated with the bond issue. The balance in the Bonds Payable acco
> The following accounts and corresponding balances were drawn from Delsey Company’s Year 2 and Year 1 year-end balance sheets. Other information drawn from the accounting records: 1. Delsey incurred a $6,000 loss on the sale of investmen
> An accountant for Southern Manufacturing Companies (SMC) computed the following information by making comparisons between SMC’s Year 1 and Year 2 balance sheets. Further information was determined by examining the company’s Year 2 income statement. 1. Th
> The December 31, Year 4, balance sheet for Burdette Corporation is presented here. These are the only accounts on Burdette’s balance sheet. Amounts indicated by question marks (?) can be calculated using the following additional informa
> The balance sheet for Shankland Corporation follows. Required Compute the following and round ratios to one decimal point. Working capital? Current ratio? Debt-to-assets ratio? Debt-to-equity ratio?
> On June 30, Year 3, Franza Company’s total current assets were $900,000 and its total current liabilities were $360,000. On July 1, Year 3, Franza issued a long-term note to a bank for $72,000 cash. Required Round computations to one decimal point. 1.Com
> On June 30, Year 3, Franza Company’s total current assets were $900,000 and its total current liabilities were $360,000. On July 1, Year 3, Franza issued a short-term note to a bank for $72,000 cash. Required 1. Compute Franza’s working capital before an
> Swartz Corporation wrote off a $1,600 uncollectible account receivable against the $48,000 balance in its allowance account. Required Explain the effect of the write-off on Swartz's current ratio.
> Selected financial information for Edwards Company for Year 4 follows. Sales $800,000 Cost of goods sold 500,000 Merchandise inventory Beginning of year 37,500 End of year 42,500Page 619 Required Assuming that the merchandise inventory buildup was r
> Bishop Company has provided the estimated data that appear in rows 4 to 8 of the following spreadsheet. Required Using the spreadsheet tips that follow, construct a spreadsheet that allows you to determine net income, break-even in units, and operating l
> Victor Holt, the accounting manager of Sexton, Inc., gathered the following information for Year 4. Some of it can be used to construct an income statement for Year 4. Ignore items that do not appear on an income statement. Some computation may be requir
> Income statements for Burch Company for Year 3 and Year 4 follow. Required Round all percentages to one decimal point. 1. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. 2. Perfor
> Sharma Company reported the following operating results for two consecutive years. Required Express each income statement component for each of the two years as a percentage of sales. Round percentages to one decimal point.
> Indicate the effect of each of the following transactions on (1) the current ratio, (2) working capital, (3) stockholders’ equity, (4) book value per share of common stock, and (5) retained earnings. Assume that the current ratio is greater than 1:1. 1.
> Match each of the following ratios with the formula used to compute it: 1. Working capital: Net income ÷ Average total stockholders’ equity 2. Current ratio: Cost of goods sold ÷ Average inventory 3. Quick ratio: Current assets − Current liabilities 4. A
> Compute the specified ratios using Duluth Company’s balance sheet for Year 3. The average number of common stock shares outstanding during Year 3 was 880 shares. Net income for the year was $40,000. Required Compute each of the followin
> During Year 3, Blue Ridge Corporation reported after-tax net income of $4,150,000. During the year, the number of shares of stock outstanding remained constant at 15,000 of $100 par, 9 percent preferred stock and 400,000 shares of common stock. The compa
> Selected data from Emporia Company follow. Table Summary: The Balance Sheet as of December 31 shows 3 columns. Column 1 has entries. Column 2 has year 3. Column 3 has year 2. Table Summary: The Income Statements for the years ended December 31 shows 3 co
> The following data come from the financial records of Fargo Corporation for Year 3. Sales $640,000 Interest expense 6,000 Income tax expense 12,000 Net income 42,000 Required How many times was interest earned in Year 3?
> Winthrop Corporation reported the following operating results for two consecutive years. Required 1. Compute the percentage changes in Winthrop Corporation’s income statement components between the two years. Round percentages to one de
> Keystone Manufacturing Company started operations on January 1, Year 1. During Year 1, the company engaged in the following transactions. 1. Issued common stock for $40,000. 2. Paid $10,000 cash to purchase raw materials used to make products. 3. Transfe
> Alaska Airlines and United Airlines are both passenger airline companies. Although they use similar assets to conduct their businesses, the estimated lives they use to depreciate their assets vary, as shown in the following table. Table Summary: A table
> The following information applies to Job 730 completed by Riverton Manufacturing Company during the month of October. The amount of labor cost for the job was $162,000. Applied overhead amounted to $230,000. The project was completed and delivered to Hud
> Stewart Condos Corporation is a small company owned by Dennis Hatch. It leases three condos of differing sizes to customers as vacation facilities. Labor costs for each condo consist of maid service and maintenance cost. Other direct operating costs cons
> Lugar Corporation makes custom-order furniture to meet the needs of persons with disabilities. On January 1, Year 2, the company had the following account balances: $37,800 for both cash and common stock. In Year 2, Lugar worked on three jobs. The releva
> Mapleton Corporation builds sailboats. On January 1, Year 3, the company had the following account balances: $48,000 for both cash and common stock. Boat 25 was started on February 10 and finished on May 31. To build the boat, Mapleton had incurred cash
> John's Car Wash (JCW) offers customers three cleaning options. Under Option 1, only the exterior is cleaned. With Option 2, the exterior and interior are cleaned. Option 3 provides exterior waxing as well as exterior and interior cleaning. JCW completed
> Kirk Gaber, a tailor in his home country, recently immigrated to the United States. He is interested in starting a business making custom suits for men. Mr. Gaber is trying to determine the cost of making a suit so he can set an appropriate selling price
> Woolrich Company makes small aluminum storage bins that it sells through a direct marketing mail-order business. The typical bin measures 6 × 8 feet. The bins are normally used to store garden tools or other small household items. Woolrich customizes bin
> Ashton Ski Company manufactures snow skis. During the most recent accounting period, the company’s finishing department transferred 5,000 sets of skis to finished goods. At the end of the accounting period, 500 sets of skis were estimated to be 40 percen
> Lennox Watches Inc. makes watches. Its assembly department started the accounting period with a beginning inventory balance of $68,000. During the accounting period, the department incurred $96,000 of transferred-in cost, $62,000 of materials cost, $120,
> Kimball Company is a cosmetics manufacturer. Its assembly department receives raw cosmetics from the molding department. The assembly department places the raw cosmetics into decorative containers and transfers them to the packaging department. The assem
> In its Form 10-K Match Group, Inc., describes itself as follows: Match Group, Inc., through its portfolio companies, is a leading provider of dating products available globally. Our portfolio of brands includes Tinder®, Match®, Meetic®, OkCupid®, Hinge®,
> Indicate which costing system (job-order, process, or hybrid) would be most appropriate for the type of product listed in the left-hand column. The first item is shown as an example. Type of Product: a. Coffee table b. Plastic storage containers c. TV s
> Brandon Manufacturing recorded the following amounts in its inventory accounts in Year 2. Required Determine the dollar amounts for (a), (b), (c), (d), and (e). Assume that underapplied and overapplied overhead is closed to Cost of Goods Sold.
> Danbury Corporation manufactures model airplanes. The company purchased for $228,000 automated production equipment that can make the model parts. The equipment has a $12,000 salvage value and a 10-year useful life. Required 1. Assuming that the equipmen
> Logan Company and Clayton Company assign manufacturing overhead to Work in Process Inventory using direct labor cost. The following information is available for the companies for the year: Required 1. Compute the predetermined overhead rate for each comp
> Tescott Company and Heizer Company both apply overhead to the Work in Process Inventory account using direct labor hours. The following information is available for both companies for the year. Required 1. Compute the predetermined overhead rate for each
> Pawhuska Company estimates that its overhead costs for Year 2 will be $720,000 and output in units of product will be 300,000 units. Required 1. Calculate Pawhuska’s predetermined overhead rate based on expected production. 2. If 24,000 units of product
> Aurora Inc. estimates manufacturing overhead costs for the Year 3 accounting period as follows. Equipment depreciation $344,000 Supplies 42,000 Materials handling 68,000 Property taxes 30,000 Production setup 42,000 Rent 70,000 Maintenance 60,000 Superv
> Use a horizontal statements model to indicate how each of the following independent accounting events affects the elements of the balance sheet and the income statement. Indicate whether the event increases (I), decreases (D), or does not affect (NA) eac
> Morland Company started Year 1 with $75,000 in its cash and common stock accounts. During Year 1, Morland paid $50,000 cash for employee compensation and $17,500 cash for materials. Required 1. Determine the total amount of assets and the amount of expen
> Dilia Company incurred manufacturing overhead cost for the year as follows. Direct materials $50/unit Direct labor $35/unit Manufacturing overhead Variable $ 15/unit Fixed ($25/unit for 1,500 units) $ 37,500 Variable selling and admin. expenses $ 10,500
> Use the 2019 Form 10-K for Southwest Airlines to complete the requirements below. To obtain the Form 10-K you can use either the EDGAR system, or it can be found under “Investor Relations,” which is under the “About Southwest” link on the company’s corpo
> Newcomb Manufacturing Company was started on January 1, Year 1, when it acquired $5,000 cash from the issue of common stock. During the first year of operation, $1,600 of direct raw materials was purchased with cash, and $1,200 of the materials was used
> Loveland Manufacturing Company was started on January 1, Year 1. The company was affected by the following events during its first year of operation. 1. Acquired $2,400 cash from the issue of common stock. 2. Paid $720 cash for direct raw materials. 3. T
> The following information pertains to Bairoil Manufacturing Company for March Year 3. Assume actual overhead equaled applied overhead. March 1 Inventory balances Raw materials $200,000 Work in process 240,000 Finished goods 156,000 March 31 Inventory
> Supply the missing information on the following schedule of cost of goods manufactured.
> Rockeagle Corporation began fiscal Year 2 with the following balances in its inventory accounts. Raw Materials $30,000 Work in Process 45,000 Finished Goods 14,000 During the accounting period, Rockeagle purchased $125,000 of raw materials and issued $12
> Stoneham Manufacturing estimated its product costs and volume of production for Year 3 by quarter as follows. Stoneham Company sells a souvenir item at various resorts across the country. Its management uses the product’s estimated quar
